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Home My WebLink AboutLAH Reso 105-86 7-16-1986RESOLUTION NO. 105-86 A RESOLUTION APPROVING AND AUTHORIZING EXECUTION OF "PRINCIPLES OF UNDERSTANDING BETWEEN THE CITY OF THE TOWN OF LOS ALTOS HILLS AND THE CITY OF PALO ALTO RELATING TO THE 1985 PALO ALTO REVENUE BOND ISSUE" RESOLVED, by the City Council of the City of the Town of Los Altos Hills, County of Santa Clara, State of California, that WHEREAS, the City Council of the City of the Town of Los Altos Hills has read and considered the "Principles of Understanding Between the City of the Town of Los Altos Hills and the City of Palo Alto Relating to the 1985 Palo Alto Revenue Bond Issue, herein called "the AGREEMENT" providing for the sharing of costs associated with the 1985. Palo Alto Revenue Bond Issue and the administrative pro- cedures associated with this bond issue, NOW, THEREFORE, IT IS HEREBY FOUND, ORDERED AND DETERMINED as follows: 1. Public interest and convenience require the entering into of the AGREEMENT, and the City of the Town of Los Altos Hills hereby approves the AGREEMENT. 2. The City of the Town of Los Altos Hills shall enter into, and the City Manager of the Town be, and he hereby is authorized and directed on behalf of said City, respectively, to execute and attest the AGREEMENT. REGULARLY passed and adopted this 16th day of July, 1986. BY ACTING MAYOR ATTEST CITY CLERK PRINCIPLES OF UNDERSTANDING BETWEEN THE CITY OF THE TOWN OF LOS ALTOS HILLS AND THE CITY OF PALO ALTO RELATING TO THE 1985 PALO ALTO REVENUE BOND ISSUE This document shall constitute the principles of understanding between the City of Palo Alto and the City of the Town of Los Altos Hills pertaining.to the incurred debt associated with the 1985 Palo Alto Revenue Bond Issue. The principles of understanding listed below are intended to be a general clarification of administrative procedures associated with the 1985 Revenue Bond Issue. 1. Issuance I.A. Issuance Both parties agree that all costs associated with the 1985 Revenue Bond Issue will be shared, on a proportional basis, and paid from the bond proceeds. Items included in these issuance costs are underwriter's discount, printing, rating agency review, and fees for bond counsel, financial advisor, fiscal agent, and tender agent. Specifically exempted from inclusion in the issuance costs are any costs incurred by the City of Palo Alto in association with any formal rating agency presentation, whether associated with 'this or any other bond issue. The City of Palo Alto agrees to be solely responsible for all expenses related to a formal rating presentation. I.B. Annual Fees Both parties agree that all annual fees associated with the 1985 Revenue Bond Issue will be shared on a proportional basis. The fees will be reflected in the annual Regional Water Quality Control budget and billed annually. Included in these annual fees will be items typically associated with a variable rate bond issue such as fees for the letter of credit bank, fiscal agent, tender agent, and remarketer. 2. Interest Earnings a. Construction Fund Both parties agree that the project construction fund shall be held in trust by the City of Palo Alto. As such, Palo Alto assumes responsibility for allocating appropriate interest earnings to the project construction fund. 1 Interest on the construction fund will be credited on a proportional basis. Interest earnings will be allocated based on the proportion of the cash balance in the construction fund to the total of Palo Alto's cash balances. The amount of interest earned by the fund as well as the method of allocation shall be clearly shown in the annual independent auditor's opinion. Unless otherwise directed, in writing, the City of the Town of Los Altos Hills' portion of excess bond proceeds, if any, shall be credited to the principal balance of the City's outstanding debt. As construction nears completion, Palo Alto will notify,the City of the Town of Los Altos Hills in writing, of anticipated excess bond proceeds. b. Reserves Held by Fiscal Agent Both parties agree that the debt service reserve and capitalized interest reserve will be held in trust by the Bank of America. Interest earned on these reserves will be paid to the City of Palo Alto who may credit the interest earnings to the City of The Town of Los Altos Hills in any reasonable manner that is consistent with good accounting practice. Palo Alto will illustrate, in the annual independent auditor's opinion, the following: 1) reserve balances; 2) total interest earned on these reserves; and 3) the. alIocation of that interest to the City of the Town of Los Altos Hills. 3. Covenant Agreements The City of the Town of Los Altos Hills agrees, to maintain revenues from any available source of its Wastewater Enterprise Fund, or to otherwise recommend rates adequate to meet its debt obligation for so long as The City of the Town of Los Altos Hills has debt outstanding under the 1985 Palo Alto Bond Issue, except nothing shall commit any revenues of the City of The Town of Los Altos Hills beyond those available from its Wastewater Fund. 4. Early Call Provision The City of The Town of Los Altos Hills shall have the uni 1 ateral right to reduce all of its outstanding debt to the City of Palo Alto at the time of: a. any interest rate mode change; or b. the date of the regularly scheduled interest payment to bond holders. Provided, however, that the amount of outstanding principal called by the City of The Town of Los Altos Hills is the total outstanding balance. In the event that the City of The Town of Los'Altos Hills chooses to call its outstanding debt at the regularly scheduled interest payment date, the City of The Town of Los Altos Hills shall serve the City of Palo Alto with written notice of its intent at least 60 days prior to that scheduled date. Upon notice of intention to retire its outstanding principal, Palo Alto upon receipt of such intent shall calculate and submit a statement to The City of the Town of Los Altos Hills illustrating: a. the total outstanding principal; b. the interest due to the call date; C. the total amounts, including interest earnings, in the debt service reserve through the date of call and may estimate earnings if necessary; and d. the net amount due to retire the debt. The City of the Town of Los Altos Hills shall deliver to Palo Alto on the specified call date a check in this full amount. Upon receipt of the final payment, The City of The Town of Los Altos Hills shall have no further obligation to the City of Palo Alto under the 1985 Revenue Bond Issue. 5. Conversion Requests All parties agree to meet and discuss in good faith a request from any party impacting the status of the bond issue. Such 3 a request may involve conversion from a variable to a fixed rate or a request to call, prior to the scheduled maturity, any or all of the outstanding principal. Palo Alto specifically agrees not to undertake such a.conver.sion or early call without discussion with The City of the Town of Los Altos Hills at least 90 days prior -to the anticipated date of conversion or call. 6. Notice of Interest Mode Change The City of Palo Alto agrees to provide the City of the'Town of Los Altos Hills with reasonable notice of any change in the interest rate mode. Reasonable notice with respect to changes to or from daily, weekly, or monthly interest rate modes will be at least 7 days prior to the anticipated date of change. Reasonable notice in regard to semiannual, annual, or fixed modes.will be at least 30 days prior to the anticipated date of mode change. The City of Palo Alto specifically agrees that it will not change to or from semiannual, annual, or fixed interest rate modes without prior consultation with the City of the Town of Los Altos Hills. 7. Billing The billing of the City of the Town of Los Altos Hills by the City of Palo Alto for all debt payments shall be as follows: a. the total annual debt service requirement, principal and interest, will be estimated and included in the annual budget forecast; b. the Town of Los Altos Hills will be billed for the actual debt service on the annual billing. d. Auditor's Report The City of Palo Alto agrees to provide the City of The Town of Los Altos Hills with an annual report conducted by an independent auditor verifying, among other details related to the Revenue Bond issue: 4 9. a, the expenses of Regional Water Quality Control Plant (RWQCP); b, actual debt service amounts; c, interest earnings of the construction fund and reserves and the allocation of these earnings; d, balances of construction fund and reserves; and e, the balance of outstanding principal owed by the City of the Town of Los Altos Hills. Palo Alto agrees to modify the scope of the auditor's future reports for inclusion of requests by the City of the Town of Los Altos Hills for additional in -formation concerning the RWQCP as they pertain to the City of the Town of Los Altos Hills. dmonrimon+ Both parties agree that it is not the intent of this document to bean all-inclusive contract, but rather a listing of general administrative guidelines. As such, both parties agree to meet and discuss in good faith any issues, whether included or not, arising between the two parties and concerning the 1985 Revenue Bond Issue. Further, both parties agree that this document may, by written agreement of both parties, be amended or supplemented at any time. Recommended: Finance D4 rectory Mark R. Harris Finance Director For The City of The Town of Los Altos Hills For The City of Palo Alto Annrnvpd Richard L. Young William Zaner Director of Utilities City Manager 5